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National

December 6, 2017

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Pakistan’s first LNG terminal saves $3 bn in two and a half years

KARACHI: Pakistan’s first ever private LNG terminal installed and commissioned by Engro ELengy Terminal Limited (EETL) on March 28, 2015 has emerged a success story as it has so far saved huge amount of over $3 billion in almost two and half years’ time by injecting RLNG of 7.4 million tons in the system.

CEO EETL Jehangir Paracha said this while talking to a group of journalists from Islamabad who were part of the ADB press mission. Partially funded by ADB with loan of $30 million, the project, Paracha said, has annually saved the loss of $1.2 billion of foreign exchange which was to be incurred on importing of furnace oil and also saved $1.7 billion per annum loss to be incurred on importing diesel. “Pakistan saves $1.7 billion each year due to fuel exchange between diesel and LNG.”

On top of that power houses’ efficiency has increased to over 55-62 percent with the usage of RLNG as fuel whereas the efficiency of the power plants on furnace oil hovers around 30-35 percent which means that the massive efficiency gains are also the dividends of usage of the RLNG that make the difference.

Jehangir Paracha said one percent efficiency on 1,000MW means the saving of $15 million which has been translated into the reduction of the cost of doing business in the country as well. He disclosed that Qatar’s existing capacity stands to annually produce LNG of 80 million tons and Doha has planned to increase its production. As far as Australia is concerned, it can increase its production up to 81 million tons of LNG till next year. However, the US in the future seems to be calling the shots in LNG market across the world as it is coming with LNG production of 57 million tons which is less than others but the production of LNG from US will increase. He said that the US has decided to sale its LNG in the market based on Henry Hub formula linked with the shale gas price. In Asia, most of the LNG pricing has been finalised based on Brent formula. He said that in the coming months, there will be glut in LNG market and major issue is to be how Pakistan gets maximum advantage out of the new scenarios of LNG prices outlook.

Paracha said that Pakistan’s direction towards importing LNG is right as it has one long-term agreement, one medium-term agreement and it has also kept focusing on spot purchasing of LNG. This model is good and favourable in Pakistan.

He also informed that the four companies that include Gunvor, Shell, Engro and Fatima are going to establish another LNG terminal in LNG zone at Port Qasim keeping in view the appetite of LNG in private sector of the country. The project will purely be on private to private model. There will be no take-off guarantee from the government involved, as the terminal will be set up by private sector and gas supply side should also be arranged by private sector and the re-gasified gas will also be given to private parties in the country. “It will have nothing to do with the government at all,” he said. Coming to the EETPL terminal, he said that for re-gasification of 400 mmcfd LNG, the terminal tariff was at 66 cents per mmbtu which has been reduced to 47 cents per mmbtu of re-gasifying 630 mmcfd LNG when EETL enters into another agreement with the government to further re-gasify another 200 mmcfd LNG. Paracha says that his company is going to install another facility of marine loading arm in the terminal which will increase efficiency of the terminal.

When the 2007 Mashal LNG project was scrapped by the Supreme Court in 2011, the head of Dutch 4 gas had put on the record that Pakistan had incurring losses of up to $3.6 billion due to delay in LNG import simply because of the economic advantages LNG provided. Pakistan, gas deficit stood at about 2 bcfd which has now reduced by 1.2 bcfd as the second LNG terminal of PGPC (Pakistan Gas Port Consortium) is also in the process to commissioning. Pakistan is saving $1.7 billion each year due to fuel exchange between diesel and LNG.

Earlier, Terminal Manager Amir Mahmud and head of operations Adil Mushtaq gave a comprehensive briefing to journalists from Islamabad and told that the terminal has so far re-gasified of LNG of 7.4 million tons and handled 120 LNG carries as of Tuesday. They said that the availability of terminal including FSRU is 98.5 percent. However, the utilisation factor stands at 95.5 percent. To a question, they responded that so far Pakistan has imported LNG from Qatar, Australia, Nigeria and Spain.

Amir Mahmud said that in one year 72 vessels of LNG are imported out of which 60 vessels come from Qatar under 15-year agreement and 12 vessels are arranged by Gunvor under five-year agreement.

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